North Carolina has an unemployment rate of 8.8 percent, the fifth highest in the nation reported by U.S. Department of Labor. The good news for North Carolina is that home foreclosures that end up in auction or become bank owned is down more than 50 percent from last year. The bad news is that the number of homes going into a pre-foreclosure status is up by 184 percent. High unemployment coupled with workers finding lower paying jobs results in many people with less income and in a position where they are unable to keep up with their debt. Coping with debt can be very stressful, and many who are in that situation make the mistake of not taking action. This is not something that will go away by itself. There is help available; you just have to take the step to seek it out. One tool to help you get control is debt settlement. It is important to understand an option before you consider it, specifically what debt settlement is and how it works in North Carolina.

How Debt Settlement Works

When you have so much debt that your income is not enough to cover your minimum payments you have a serious problem. Debt settlement involves negotiating with your creditors to accept a payment for less than the debt. The negotiating is usually done by a third party and if a settlement is accepted you would make payments to the third party, who would then settle your debts with your creditors.

Debt Settlement is a Serious Decision

If you are overwhelmed by your debt your options are limited. Debt settlement may be just the tool you need to get you back on the path to financial well-being. There are consequences to engaging in debt settlement, including a negative impact on your credit score and any debt forgiven may be considered as taxable income by the IRS.

North Carolina Laws

North Carolina statutes have specific rules regarding debt settlement or “debt adjusting” as they refer to it. It's best to avoid a person or business that offers debt settlement services for a fee, especially if that is all they do. What you are looking for is an organization that, in addition to debt settlement, provides education, credit counseling and debt management services.

In such cases, a nominal charge is allowed that cannot exceed a $40 set-up fee and 10% of the monthly payment made -- not to exceed $40 per month.

Be Prepared

Familiarize yourself with your options and North Carolina's rules. This information will enable you to make an informed decision and also help you to avoid unscrupulous individuals or organizations who would take advantage of you in a time of financial crisis.